Homeownership 101

The Texas option period

Nearly everything written about the option period is written for buyers. Here is what it actually says, plus the part sellers never get told: what those days cost you, and how to think about the number when you are looking at two offers.

It usually shows up as a phone call. You accepted an offer on Friday, you have been telling people your house is sold, and now it is Wednesday and your agent is calling to say the buyer wants to talk about the inspection. That conversation is happening because of one paragraph, and most sellers have no idea how much power it hands to the other side.

So let us go through it properly, because it is not complicated — it is just never explained.

What it actually is

In the Texas promulgated contract, the buyer can pay a fee for the unrestricted right to walk away for a stated number of days. Unrestricted is the operative word. They do not need a reason. They do not need a failed inspection, a bad appraisal or a change of heart they can articulate. They can terminate because they slept on it.

Here is the machinery.

Where it lives	Paragraph 5
Option fee paid to	The escrow agent
Deadline to deliver it	3 days after the effective date
Length of the option period	Negotiated — a blank in the contract
Deadline to give notice	5:00 p.m. on the final day
Refundable	No — it goes to the seller
Credited to the sales price	Yes, at closing

Two of those trip people up regularly.

The fee goes to the title company, not to you. Sellers hear “option fee” and picture a check arriving. It sits with the escrow agent, and the escrow agent releases it — which, since the contract was revised, does not require the buyer to sign off again.

And it is credited back to the sales price at closing. So on a deal that actually closes, the option fee is not extra money in your pocket. It is the buyer prepaying a sliver of the price. The only scenario in which you keep it as real money is the one where you lost the buyer.

The three-day trap

This is the part worth knowing, and it cuts both ways.

If no dollar amount is written in as the option fee, or if the buyer does not deliver it within the time required, the contract says the buyer does not have the unrestricted right to terminate. Not a reduced right. Not a warning. The free exit simply is not there.

The contract itself keeps going — this does not cancel the sale. But a buyer who was three days late with a small fee has just walked into the deal without the escape hatch they thought they had bought.

If you are buying, this is the single most avoidable mistake in the transaction and it is entirely administrative. Deliver the fee immediately, get the receipt, and do not assume somebody else handled it. Deadlines that land on a weekend or a legal holiday can shift, and your contract says how, so confirm the actual calendar date rather than counting on your fingers.

What it costs the seller

Now the part nobody writes.

The day you accept an offer, your house comes off the market in every way that matters. It shows as under contract. The showings stop. The buyers who were circling move on to something else, and they do not keep a tab open on your listing waiting to see whether it falls through.

Then you hand the buyer a stretch of days during which they can leave for no reason, and you get a few hundred dollars for it that you give back at closing anyway.

That is not an argument against the option period. It is a standard part of every residential deal in this state and a buyer who refuses to do inspections is not a better buyer. It is an argument for being clear-eyed about what you are actually granting, because it means the length of the option period is a real term of the deal — not boilerplate to skim past on your way to the price.

So how many days should you agree to?

Long enough for a competent inspection and short enough that you are not carrying the risk for a fortnight. In practice the honest questions are whether this buyer has actually lined up an inspector, whether the number of days they asked for matches the work they need to do, and what else about the offer suggests they are serious.

A buyer asking for an unusually long window is telling you something. Maybe they are coordinating a specialist inspection on an older house, which is reasonable and worth accommodating. Maybe they are not fully decided and want more time to be sure at your expense. Those look identical on paper, and telling them apart is most of the job.

Which is also why the highest number is not automatically the best offer. A slightly lower price with a tight option period and a buyer who has already booked the inspector is frequently worth more than the headline figure attached to somebody still making up their mind — the same reasoning that sits behind how we price a home in the first place.

And if you are the buyer

Use it for what it is for. Get the inspection done early enough that you have time to read it, get bids on anything significant, and make your ask with days to spare rather than at 4:50 p.m. on the last afternoon.

One thing to hold onto: the option fee and the earnest money are different animals. If you terminate in time, the option fee is gone and the earnest money comes back to you. The earnest money is usually the much larger number, which is exactly why the deadline matters so much.

This is general information about a form promulgated by the Texas Real Estate Commission, current as of September 2026, and not legal advice. Contract forms are revised periodically and many terms are negotiable; read your own contract and consult an attorney about your specific situation. Jeff Updike and Weston Pugh are licensed Texas real estate agents with Dave Perry-Miller Real Estate, not attorneys. Equal Housing Opportunity.